Key investment points: The performance for the first three quarters fell by 28.24%, which is basically in line with expectations: the company released its 2016 three-quarter report. In the first three quarters, the company achieved operating income of 1,688 million yuan, an increase of 235.29% over the previous year; net profit of 284 million yuan, an increase of 33.60% over the previous year. The corresponding EPS is 0.52 yuan. Among them, revenue for the third quarter was 471 million yuan, up 354.78% year on year; net profit was 41 million yuan, up 8.14% year on year; and profit for the second quarter was 72 million yuan, a sharp decrease of 42.49% over the previous year. The corresponding EPS for the 3rd quarter was 0.08 yuan. Thermal power dragged down overall performance, and the photovoltaic business developed steadily; overall profitability declined sharply month-on-month: the company's performance fell 50.52% in the third quarter, a significant decline. This is mainly due to the drag on thermal power performance: 1) electricity prices and heating prices in the first half of the year were reduced by 4.17 points/kWh to 5.2 yuan/GJ; 2) the rapid rise in coal prices had a large impact on costs; 3) the impact of the rapid rise in coal prices on the cost; 3) the impact of the rapid rise in coal prices on the number of hours of power generation utilization. According to estimates, in the third quarter, the total revenue of heat power and heating contributed about 400 million yuan, with a profit of 0.25-30 million yuan, a significant decrease from the previous year; the photovoltaic sector contributed 0.45 to 55 million yuan in revenue, and contributed 0.12-05 billion yuan in profit, with steady growth. In the third quarter, the company's overall gross profit margin was 20.06%, down 8.59 percentage points from the previous month; the overall net profit margin was 8.81%, down 6.35 percentage points from the previous month, and profitability declined sharply. The expense ratio for the period dropped sharply, and the turnover of accounts receivable accelerated: the company's management and financial expenses for 2016 Q1-3 were 39 million yuan and 41 million yuan respectively, down 3.22% year on year and up 13.52%, respectively. The cost rate for the period decreased by 10.47 percentage points to 4.75%. Among them, the management and finance cost rates decreased by 5.70, 4.77 percentage points to 2.31% and 2.44%, respectively, from 2015 Q1-3. The company's 2016 Q1-3 advance payment was $031 million, a year-on-year decrease of $69 million; cash flow from operating activities during the same period was $191 million, an increase of $112 million over the same period, mainly an increase of $1,073 million in cash from sales of products. Inventory was 82 million yuan, up 436.94% year on year; inventory turnover days were 17.49 days, a decrease of 6 days from the previous year, and the inventory monetization rate was stable; accounts receivable was 374 million yuan, up 162.31% year on year; accounts receivable turnover days were 58.02 days, a decrease of 15 days from the previous year, and the repayment rate was stable. Invest 200 million yuan to set up a power sales company and actively participate in the electricity sales market to share the dividends of electricity reform: the company invested 201 million yuan to establish a wholly-owned subsidiary, Hebei Liangneng Electricity Sales Co., Ltd. Actively participating in market competition on the electricity sales side is conducive to leveraging the company's cogeneration advantages, seizing the opportunities of power system reform, accelerating the development of smart energy, extending and expanding the company's power business, enhancing the company's competitiveness in the regional electricity market, and sharing the dividends of power system reform. The pace of independent development of the clean energy industry is accelerating, and 2016-2017 will usher in a peak of production of new projects: the company is based on expanding, strengthening, and improving listed companies to further accelerate the pace of developing new energy in surrounding provinces and cities such as Shanxi and Inner Mongolia: 1) In terms of wind power, projects in Heshun, Shanxi, Lingqiu, Shanxi, and Wuchuan in Inner Mongolia are progressing rapidly, while actively seeking opportunities for wind power cooperation and acquisition to continue to expand development space; 2) The photovoltaics company recently won the bid for the 100MWp Yangquan coal sink area leader base project to lock in the 50MWp The PV power generation project will be connected to the grid within this year, and it has now been completed The agreement between the 380MW photovoltaic power plant and the 600MW wind farm project is expected to usher in the peak of production of new projects in 2016-2017. It is expected to become a platform for China Power Investment's new energy asset securitization, and implementation of the injection commitment is close: by the end of 2015, China Power Investment Group's cumulative installed capacity had reached 107.40 GW, and the share of clean energy had reached 40.06%, while the asset securitization rate was the lowest among the five major power generation groups, so there is plenty of room for future improvement. Group companies are integrated to create a special new energy operation platform, which can carry out specialized management, reduce competition in the industry, and expand financing channels. We judge that the company will be the best platform for the securitization of China Power Investment Group's new energy assets. By the end of 2015, China Power Investment Corporation Hebei had 1.34 GW of photovoltaic projects, of which 413.7 MW was connected to the grid and 927 MW projects were under construction or proposed; it had 1.15 GW of wind power projects, of which 148.5 MW was connected to the grid and 1 GW was under construction or proposed. It will provide a good target asset for China Power Investment Group to increase its asset securitization rate, and also provide a basic guarantee for the company to rapidly expand, strengthen, and improve its clean energy platform. Furthermore, China Power Investment Group's asset injection price (primary market value) is relatively low, and there is plenty of room for asset appreciation in the secondary market. In 2013, the group company promised to inject high-quality assets from the Hebei branch into listed companies within three years to resolve competition issues in the industry. The promise expires in January 2017, and it is expected that the implementation of asset injection will be imminent. Investment suggestions: The company's 2016-2018 EPS is expected to be 0.64 yuan, 0.79 yuan, and 0.97 yuan respectively, and the performance growth rates are -20.88%, 23.86%, and 21.94%, respectively. In 2016-2017, the company will usher in a peak of production of new energy projects. China Power Investment Group's asset injection expectations are strong. Considering the high growth of the company's “big groups and small companies”, with multiple themes such as state-owned enterprise reform, Beijing-Tianjin-Hebei, Winter Olympics, and nuclear power, the company will be given 25 times PE in 2017, with a target price of 20 yuan, maintaining the company's “buy” investment rating. Risk warning: Group asset injection falls short of expectations; progress in the commissioning of new projects falls short of expectations; project profit falls short of expectations; and financing falls short of expectations.